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Friday, 5 May 2017

FTSE 100 falls but Pearson boosted by cost cutting plan

Education company Pearson and British Airways owner IAG enjoyed big gains as trading began although the market was down overall.

The benchmark FTSE 100 index dropped 12.91 points in early trade to 7,235.19, with oil and mining companies lower as commodity prices fell.

But shares in Pearson jumped 11% after it announced plans to cut costs by £300m a year by the end of 2019.

It also launched a "strategic review" of its US school publishing business.

The US business has proved problematic recently as students have been renting textbooks instead of buying them. As a result, Pearson has issued five profit warnings in four years.

IAG shares rose 5% after the airline group reported record first-quarter results.

The company - which owns BA, Aer Lingus and Iberia - said underlying operating profit rose 9.7% to 170m euros (£144m). That was despite IAG taking a 32m-euro hit to profits in the quarter as a result of the weak pound.

"IAG has been able to navigate its way through stormy conditions last year, posting a 31% rise in annual profits in February so this is continuing the trend and means it's on track to live up to expectations that this year will be even better than last," said Neil Wilson at ETX Capital.

Shares Marks and Spencer rose 3.5% after the retail giant announced it had appointed former Asda boss Archie Norman as its new chairman.

On the currency markets, the pound was unchanged against the dollar at $1.2929, but rose 0.2% against the euro to 1.1783 euros.